PROBLEM #1
Xavier Company produces a single product. Variable manufacturing overhead is applied to products on the basis of direct labor-hours. The standard costs for one unit of product are as follows:
Direct material: 6 ounces at $0.50 per ounce . . . . . . . . . . . . . . . . . . $3
Direct labor: 1.8 hours at $10 per hour . . . . . . . . . . . . . . . . . . . . . . . 18
Variable manufacturing overhead: 1.8 hours at $5 per hour . . . . . . . 9
Total standard variable cost per unit . . . . . . . . . . . . . . . . . . . . . . . . . $30
During June, 2,000 units were produced. The costs associated with June’s operations were as follows:
Material purchased: 18,000 ounces at $0.60 per ounce . . . . . . . $10,800
Material used in production: 14,000 ounces . . . . . . . . . . . . . . . . . —
Direct labor: 4,000 hours at $9.75 per hour . . . . . . . . . . . . . . . . . $39,000
Variable manufacturing overhead costs incurred . . . . . . . . . . . . . $20,800
Required:
Compute the direct materials, direct labor, and variable manufacturing overhead variances.
PROBLEM #2
NovexCompany keeps careful track of the time to complete customer orders. During the most recent quarter, the following average times were recorded for each unit or order:
Days
Wait time . . . . . . . . . . . . 17.0
Inspection time . . . . . . . . 0.4
Process time . . . . . . . . . .2.0
Move time . . . . . . . . . . . .0.6
Queue time . . . . . . . . . . .5.0
Goods are shipped as soon as production is completed.
Required:
- Compute the throughput time.
- Compute the manufacturing cycle efficiency (MCE).
- What percentage of the production time is spent in non-value-added activities?
- Compute the delivery cycle time.